by frog
You can tell a series has lost it’s punch when it takes me 4 days to get the post up about it. I simply cannot believe that the Reserve Bank has turned out yet another oil price forecast guaranteed to be a loser – like every single previous forecast of the last four years. The problem is, central and local governments all plan and sign contracts based on these fallacious assumptions, and it’s we, the taxpayer, that end up paying the price. It was yesterday’s editorial in the Dom Post, which has finally taken Jeanette’s plea to the people, that reminded me that this is still a new issue to the average person on the street. Here’s the graph built from last week’s Monetary Policy Statement data:
How many more times do the central government organs have to be wrong about oil before they sit down and look at alternatives? This earlier post in the series is laughable in that we would just love to have $90/bbl oil again. Wouldn’t we?
on the trolls and those who are unable to keep on topic
Never mind Frog, to get the right numbers you just have to swivel the hockey stick the other way round – easy. AFter all, is treasury can miss out a few hundred million here and there, the RBNZ can get their graphics upside down, eh!
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I suppose we have to congratulate them for actually noticing that the oil price has shot up and so adjusting the starting point on their projection!
But they are now saying that the price of oil will be over $100 in 2010 and even if this is wildly inaccurate at least it should change the cost-benefit analysis for loads of projects.
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You know, if I produced estimates of something every now and again, and they were as wide of the mark as that lot are, I would fully expect my boss to invite me in to his office to be had a word with…
Even my pathetically simple model of petrol price has been more right for some time, in that it just assumes a slope, and that prices go up it. Thats not to say my model is right; 91 octane should be 1.99.9 this week, so a slight underestimate, but it doesn’t assume prices are going down any time soon, simply on the basis that there is no historical trend for that to happen. As Yazz noted, the only way is up.
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Unless their job is to lie. Not necessarily overtly, they may be lying to themselves too. RBNZ and Treasury are temples of neo-liberal economics and their worldview depends on never ending growth, requiring never ending resources, particularly oil. And think how government policy will have to change when it is finally admitted the age of cheap oil is over. Just one example, all the justification for those billions to be spent on roads would float out the window like exhaust fumes. Treasury would have to start recommending public transport and other infrastructure projects based on the Greens play book. This time will come, but RBNZ and Treasury (and Labour and particularly the Nats) wish to put off the truth as long as possible.
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>>all the justification for those billions to be spent on roads would float out the window
Why do you think we don’t need to spend money on roads?
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Valis,
Roads are not for the eclisive use of petrol powered verhicles. Now or in the future.
Roads are for bicylist, horse drawn carriges, heck even public transport busses, and any other type of motive transport you can think off.
Even your feet need a public road to get you from the letter box to the post office.
Irrespective if oil runs out or is so expensive that none can afford it, roading will still be required to run electric powered public and private transport. (if New Zeland ever gets around to building some more electric generation projects).
What alternative to roading did you have in mind? Remembering that rail is nothing but a steel road.
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Personal aircraft, perhaps?
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Teleportation stations?
It’s all getting very Jetsons without these roads we no longer need.
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Sustainability sounds great but implies restraint. When i think of sustainability the only model i can think of is the Amish. Where are the Greens on sustainability given that you want Ti Tiriti to be the basic political arrangement for “Aotearoa”; have no policy on immigration rather than to be open armed and welcoming and have a (my guess) limp population policy and believe that the state should be breadwinner for every female who wants to have a baby.
This is only possible under the current (unsustainable) neoliberal agenda.
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jh said: …have no policy on immigration rather than to be open armed and welcoming and have a (my guess) limp population policy…
Don’t pre-judge what you don’t know, jh. Like all political parties, the Greens try to be strategic about when they release their policies. Watch this space for the immigration and population ones.
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Can a Green spokesperson articulate what Ti Tiriti would mean in practice?
And what is the “just distribution of social and natural resources”? Who decides what is “just”, and how would this distribution occur?
“decisions will be made directly at the appropriate level by those affected”
So the owners of a speedway want to make noise, and residents don’t. What is the appropriate level for that decision?
“Non-violent conflict resolution”
Guy walks into a bar, starts shooting everyone inside. He can’t be reasoned with. He takes aim to shoot a baby. What do you do?
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Oh, there we go again – another straw man argument that the Greens think that roads should be eliminated. We don’t. We just don’t want to build more when we already have enough and it already costs a bomb to maintain what we have. How about we keep the roads we already have, but in better condition? How about we spend the billions that the LabNats want to spend on new roads on PT, with a little extra bit thrown in to fix up the roads we’ve got?
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>>when we already have enough
We do?
>>on PT
Because PT isn’t a viable solution outside densely populated city areas, and is isn’t suited to particular journeys, especially those involving kids and dogs.
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And what will we be driving our replacement fleet of electric cars on? If you think the car is dead, you’re dreaming.
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BP – there you go again – with the straw man that Greens oppose all roading. Did you even bother to read my comment, you old troll?
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Yes. What makes you thinks roads will be used any less? We need more capacity now. Ergo, we need more roading projects.
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We don’t need any more capacity than we’ve got already. We just need to manage better. Do you have any idea how many traffic optimisation projects sit unfunded at the moment, all with negative costs to the economy? It’s huge.
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Along Cambridge Terrace and up through the tunnel means nothing to you, then….
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Its just planning for the future, and one that isn’t based on the past with its cheap, plentiful oil. Greens don’t mind roads, just the incredible bias built into the system that will see billion upon billion going into them at the expense of other transport options. If a new road is wanted, there is a huge fund sitting there to draw on. If PT is wanted, laws have to be passed and new taxes raised. We’d like to see this imbalance removed. One of the main justifications that keeps things as they are is that the cost/benefit planning is based on RBNZ/Treasury models, which we know are worthless as they do not plan on any realistic future price of oil. But times are a changin’.
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Valis,
There is no imbalance. Money is allocated for PT. But not being spent.
One example of PT funding that is going unfulfilled is the double tracking and electrification of the Newmarket to Waitakarei rail line.
Was in the budget some 3 years ago.
Guess what, still not completed, no trainsets ordered, no increase in electrical generation infastructure required to run the trains, etc.
Dont blame road funding, this money was allocatted but the government is just not spending it.
On the plus side they have finally riped up the Onehunga line so that new rails can be laid. Not holding my breath on that cpmpletion of that PT project either.
North Shore buslane most be doing reasonbly well as the local counsil regularly tows cars away from neighbouring street because the park and ride is full. So park and ride capacity has already been reached.
But to keep people on PT, the infastructure must be expanded to cater for the users. All those commutors whose cars got towed will no doubt find it easier to use their cars to cross the bridge.
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Gerrit – That’s a poor example. That PT project has been in the works since the money was allocated. I know, because my old flat is in the firing line and I have had the endless emails from the council and ontrack about the disruption to services and the ongoing planning. The new Khyber Pass Station is going in, the new bridges, and the double tracking between Newmarket and Boston Road. It’s all happening!
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frog,
Then I stand corrected.
Do they say when the trainsets will arrive? How much electricity will be consumed and where it will be generated?
Hey dont get me wrong, I’m for public transport (having been spoilt by the PT system in Melbourne) but for goodness sake build it with contingencies for growth. Something the park and ride facilities the North Shore busway is sadly lacking.
Good to hear that the rail link from the main trunk to Manukau is going ahead again (or is back on the agenda anyway). Seems stupid to build the Southern Motorway- SH20 roading infastructure without adding the rail link at the same time.
Cant see it on any plans so might still not happen as the earthworks are nearly complete.
Would have been a simple to extend that line to the airport with a major junction at Puhunui.
Guess that really gets my goat. Why is the minister for development (or even Judith Tizard the minister for Auckland) assessing all major infastruture works so that PT and roading development have at least some build in synergies.
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Gerrit – While I’m bullish on the track upgrades, I’m not convinced we have a win on the trainset itself. I think, (guessing here), that the purchase of the electric train bits was contingent on the regional fuel tax, because of course we cannot spend too much central govt money on PT over roads, (tongue in cheek). Now that Labour has backed off on that plan, I have no idea where that lies. What do you bet that Labour “finds” the “extra” money for the trainsets just before the election, (after more acid poured on them from the Greens), in a bid to improve their polls? (Not that I’m adverse to the odd lolly scramble, just jealous when PT is so clearly our issue.)
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Okay, BluePeter, as a transportation planner I just have to step in here to clear up a few misconceptions.
First of all, I think it is safe to say that the Greens have nothing against publicly funded STREETS. When speaking of useless funding of roads, it is by and large MOTORWAYS that the Greens object to. Motorways are in fact mainly used by private vehicles– personal, commercial and heavy lorries, and incidentally are not fully paid for out of road user charges or fuel taxes..
Secondly, as mentioned in other posts, we don’t need more road capacity. Congestion usually occurs for a short period during the day, 2-6 hours, or less. Does it make sense to spend valuable resources on adding lanes, when they will only be well used for 8 – 25% of the day at most? Moreover, studies have consistently shown that adding road capacity stimulates new trips and new development that then results in more trips. Expand road capacity and you will only solve peak hour congestion for a few years at most.
We don’t need more road capacity to have a thriving economy because the current demand for roads is uneconomic. This is because users are not directly charged for the use of all the resources associated with motor vehicle use. And I’m not talking about esoteric nonmarket costs like air pollution, greenhouse gas emissions and stormwater contamination. Just the land alone required to provide for personal vehicles is astounding and it is not charged directly to users, particularly car parks. This resource cost would still be an issue with electric vehicles.
The reasons why parking has been subsidised are long and complex, so I won’t go into it here. But ask yourself how often you pay to use a carpark. There is a cost involved in providing that land for what is an extremely low value use, and if it were charged directly to drivers, it would double the vehicle operating costs of the average commuter trip. Because the cost is bundled with development, we all pay higher prices for goods, services and land, and development tends to head out to the fringes where land is cheap so it can provide all that free parking it is required to provide. If parking is priced, and space on the road is priced during peak hour with congestion pricing, current peak demand could be reduced by about 30%.
Finally, I just want to note that before each household had 2+ cars, people were still travelling from origins to destinations, with or without small children. It has only been in the last 50 years (probably only 25 in New Zealand) that cars have become so ubiquitous. If they weren’t a necessity for the vast majority of human history, why should they continue to be? They aren’t as necessary in many other wealthy and thriving OECD countries.
That PT requires a critical amount of density to work is slightly misleading. Auckland had electric trams that ran all over the isthmus for a penny a trip at the turn of the 20th century, and population was much lower then! 1) If parking was fully priced, PT might not even need subsidies, and 2) development patterns would be more conducive to all alternative mode trips.
I don’t think PT is the answer to getting every individual to where they currently go with a car. The reason why development has occured in a way that requires cars is precisely because car use has been underpriced, and planning regulations have effectively subsidised parking and forced single use zones (eg residential). If the resource use required to sustain car transport is fully charged, and stupid planning regulations done away with, I think we will find a lot more development will occur in patterns that make it easy to access goods and services by all alternative modes (walking, cycling, PT). And for those who live in desperately car dependent suburbs, there are always the options of car pooling, working from home, or linking trips, until the market responds. People are flexible, they will adapt. 2/3 of all trips are under 5km, and about 1/3 under 2km, so many “necessary” trips could be replaced with cycling and walking, in a pinch.
From a cost benefit point of view, investing in more motorways does not make any sense, even if rising oil prices weren’t going to make it terribly uneconomic to use a car every single day to go to work/market. Yes, invest in rail, coastal shipping, PT, and walking and cycling infrastructure. But start pricing the valuable resources taken up by vehicles (even electric ones!) and within a ten years we won’t live in such car dependent towns and cities. And I must say, the Greens are the only party that relies on sound transportation research for their policies. They are right on track for a sustainable and thriving land development outcome!
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I think I’m in love
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Valis said “Greens don’t mind roads, just the incredible bias built into the system that will see billion upon billion going into them at the expense of other transport options.”
Bias? You mean spending roading revenue on roads is biased? Why should the money road users are being charged for using roads be spent on something that provides no proved benefit to road users? There are much more important things that money can be spent on than motorways or trains. Safety and rates relief are top of the list.
If you don’t know why there is a petrol tax then let the politicians who introduced it tell you why themselves:
http://www.petroltax.org.nz/PDF/PetrolTaxResolutionDebate.PDF
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Julie,
Firstly, how do you arrive at the conclusion that motorways are not fully paid for out of road user charges or fuel taxes? Are you limiting fuel taxes to the hypothecated excise duty? The Crown’s contributions to the LTF appears (from the NLTP forecasts) to be less than the Crown’s revenues from the Crown excise duty. Or do you mean that motorways are subsidised by other roads?
Secondly, the studies by Robert Cerbera (UCTC) have revealed that property developers are responsible for most of the long run induced traffic on California freeways. Several studies of UK bypasses support this hypothesis. Trying to build your way out of congestion merely removes the incentive for business expansion to occur in areas served by roads with adequate existing capacity. The “do nothing” option may not help Auckland”s economic growth but it will help Timaru’s and Palmeston North’s because they have the port, rail, road and land resources to accomodate the import distribution warehousing just as economicly as Auckland can. Those centres are currently paying 18 cents a litre to subsidies Auckland’s motorway projects. In effect paying for their own execution bullet.
Thirdly, I agree with your targetting of “free” parking. Although it is only fair to point out that the area occupied by our local roads hasn’t increased (except in subdivisions) since the motorcar arrived 110 years ago. Thus kerbside parking isn’t using valuable land, except in commercial areas. In fact the feeder road I live on had it’s carriageway reduced in width reduced as a speed management tool. The freed up land hasn’t been used for any useful purpose, just a grass verge, in a city with a by-law prohibiting parking on grass verges.
Incidentally, New Zealand has had car ownership levels close to that of the USA since at least 1929, when the Department of Transport made it’s first report to Parliament. That is entirely consistent with what you would expect in young, sparsely populated agricultural nations. After WWII both nations adopted single use zoning, minimum section size regulations and first home buyer mortgage subsidies with a vengeance. In the same period both countries overhauled their highway and road funding systems leading to a dramatic improvement in roads and road funding, mainly by charging road users a lot more in fuel taxes. Most greenies blame the effects of the former on the latter. It is refreshing to hear from someone who understands the real reason behind Auckland’s car dependence. Actually Christchurch, with no proper motorways, is definitely more car dependent than Auckland. I haven’t seen any recent stats for other cities and towns but I wouldn’t be surprised if they are almost as car dependent as the big cities.
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Julie, Thanks for your informative contribution. The moderator swallowed my longer reply with a few queries about one or two of your sources and conclusions.
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Hi Kevyn,
Happy to discuss sources more in depth , but at work now. Just very quickly :
– according to the NLTP, funding comes from Crown funds, road user charges, fuel excise tax, motor vehicle registration and licensing fees. The 2006 budget allocated extra funding from the Crown for state highways over 10 years, over and above the amount gained through fuel taxes etc. Also, registration and licensing fees are a significant portion of the current programme (equal to about 1/3 the amount of fuel excise) and these are not variable. So, they are not directly charged to users based on road use. Local roads are one of the biggest expenses of local council budgets and these are mainly funded through property rates, which have nothing to do with road use. In fact, properties in the central city tend to be worth more and therefore rated at a higher value than those in suburbs where people drive more.
Total spending on local road maintenance and improvements in 2006/7 is forecast as 1,651 mil, while total revenue from road user charges and fuel excise is 1,567 mil. Of course, the expenses incurred by road use are not limited to maintenance and improvements of the roads — there are GHG emissions (which have a market cost for taxpayers during the Kyoto period), the opportunity cost of the land not used for other uses that could provide a return, stormwater management (also paid for out of local and regional rates or just with property and ecological damage), social cost of accidents, etc.
But maybe you are counting also the GST on fuel excise as a road user charge?
– Do you mean Robert Cervero from UC Berkeley? I like him, he does great research! Actually it is precisely one of his papers that is the most conclusive about induced development. The thing is, property developers wouldn’t have such an incentive to develop out in the urban fringes if there were not easy access in the form of a newly decongested motorway link. So, I would say yes property development induces traffic, but road capacity (or any transport improvement) induces development. You can see this in the old structure of Auckland inner suburbs that developed around the trolley lines, like Sandringham shops, morningside shops, Kingsland, etc. If we only build trains, then development will cluster around train lines. If we build motorways and connector roads and don’t charge directly for their use, development will sprawl out in a car dependent fashoin that is difficult to serve any other way but by car. And eventually, as population increases and cars increase, congestion increases. A lane of motorway can only move a small amount of people if they are 1.5 per car (2400). Whereas in a bus, light rail, or heavy rail corridor you can move 5 to 10 x more people with the same amount of corridor space.
I take your point about Palmy subsidising Auckland’s economic development. And I think it is an excellent example of how road use is not directly charged to users.
– Kerbside parking isn’t the worst way to provide parking, but it does detract from the street environment when it starts to dominate the scene. On my street the kerbside parking on each side takes about 4 times the space of the footpath. It’s a pretty uninviting footpath. I am aware of a street kiosk in Waitakere that takes the space of one or two car parks, and it fetches $ 8,000 a year in rent. So, my point is, even the kerbside land does have a value, and it could in certain areas be reclaimed for wider footpaths, cycle paths, and / or small business opportunities. If it’s economic. I just think that it shouldn’t be given freely away as a place to store vehicles. If demand for parking is great enough, people will be happy to pay for that kerbside parking.
– I thought that car ownership increased greatly in NZ after the tarrifs on imports were dropped in the 80s? But you probably know more than I.
– Just looking at census travel to work data, looks like Bay of Penty has the highest mode share single occupant drivers. Auckland is a close second. So Christchurch might not be as bad as you think. But I guess a better measure would be VKT per person, broken down by region. I don’t have that info.
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heh. i’m reminded of the statement that if every day you keep predicting the end of the world tomorrow, you will eventually be able to say “told you so” to all the people who called you crazy (if you live long enough that is)
maybe if an alternative energy source comes along the rbnz will eventually be able to say they finally got it right, but in the meantime they can’t seem to understand the immutable fact – ever-diminishing supply means ever-increasing price
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Julie,
Perhaps I should clarify that in my view if the Crown contribution to the NLTF isn’t greater than the Crown’s revenue from the Crown petol tax then the Crown’s contribution must be regarded as coming from road users, as though that portion of the Crown petrol tax was hypothecated.
I know the reason why roads and streets were originally funded by rates and why that was cut to 50% in 1953 was based on share of benefits as well as share of costs. It is a mystery why that 50/50 split hasn’t been reviewed since 1953. Unfortunately local authorities don’t itemise their road spending so it’s impossible to tell what percentage of city council spending on roads is being spent on streetscaping, footpaths, lighting or carriageways. I think it is probably safe to say that district council road spending is entirely on carriageways. I am inclined to the view that street facilities provided before the advent of the motorcar are legitimate costs to ratepayers. In the 1800s the Rating Act had special provisions for rates and other charges for footpaths, gutters and streetlights. If there was widespread sealing of CBD streets in the 1800s it would have been only to provide a weather proof surface for shoppers crossing the street and wouldn’t been much more than a crust. Hence tarsealing is a legitimate cost to road users even if businesses and home owners also benefit since they could get the same benefit with the expensive base needed for motor traffic.
I have no disagreement with the costs of road use you mention, except for opportunity cost. This makes sense for limited access roads but for other roads it seems to me that the loss of access on all other land would outweigh the opportunity cost of not being able to farm or subdivide a road reserve.
The verge on the road where I live definitely should have been reclaimed for a cycleway and wider footpaths. As is it cyclists have to compete for space on a feeder road that can only accomodate two cars and an Orbiter bus side by side. IMHO a very effective perceptual countermeasure to speeding.
NZ vehicle and population stats since 1951 can be found here, although if you have access to the IRF statbook that would be even better to compare with other countries.
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andrew Says:
June 12th, 2008 at 7:16 pm
> heh. i’m reminded of the statement that if every day you keep predicting the end of the world tomorrow, you will eventually be able to say “told you so? to all the people who called you crazy (if you live long enough that is)
no, you will never be right. If the world really did end, you wouldn’t be here to say ‘I told you so’.
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maybe in the afterlife…?
that’s probably the most common phrase there: “hah – i told you so!”
actually it occurs to me if you plot house prices alongside periodical “expert” predictions (other than those from real estate companies) it’d look a lot like this graph
this makes me giggle:
LOL
http://www.nzherald.co.nz/category/story.cfm?c_id=76&objectid=10492151
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frog – i have often albeit infrequently been a critic but that is a very good graph. It made me laugh out loud. I guess their only defence is that they have been relying on other commentators in a herd effect forecast.
There is very definitely a speculative bubble effect built into the price right now. It is feeding on itself and will eventually burst.
and Julie – That $8,000 kiosk rental is because of scarcity value. try agreeing with Not PC and allowing uncontrolled development and see what the prices reduces to and what your roadsides will start to look like.
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Neville Bennet is very blunt in the latest NBR; he talks about the IEA doing a depletion rate assessment and is grooming the world for bad news and projects in the pipeline that there just wont be the oil for.
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but how does speculation impact the price of oil? as someone else pointed out here recently, it’s not easy to buy & store significant quantities of oil with which to speculate.
most speculation would be on the futures market, where the speculator makes a profit or loss depending on the spot price for oil upon maturation of their futures contract – rather than actually affecting the spot price of oil through their futures trading.
it seems to me the main form of speculation likely to affect market prices involves the decision by those who own oil fields to pump a little or a lot of oil from them in a given time period
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